Long-term care: Think about it while you're young, experts say

Deborah L. Shelton, Chicago Tribune reporter

Living at home is no longer a safe option for Anna Vitko, who has been in and out of the hospital at least six times since June.

She's unsteady on her feet and has battled numerous health problems, including diabetes, congestive heart failure and chronic obstructive pulmonary disease. Her son shares a home with her in Cicero, but even with his help and the assistance of a part-time caregiver, she has not been able to manage.

Like many seniors, she cannot afford to pay for long-term care on her own. Medicare covered her care in a skilled nursing facility for 100 days only, and her Medicare supplementary insurance has run out.

Vitko, 83, knows she is better off in the nursing facility and would like to stay there.

"The only thing is, the insurance has run out and I have to figure out a way to pay for it," said her son Carl, who said the situation is stressful financially and emotionally. "It breaks my heart because I didn't want her there. I would love to have her at home."

The last thing on most people's minds when they're young and healthy is contemplating what life might be like when they aren't. But as they age, they are likely to need costly help, whether it is specialized nursing care, in-home caregivers or assistance with the simple tasks of daily life, like getting dressed in the morning.

The wealthy can afford to pay for such things, and the poor can qualify for coverage through the federal Medicaid program. It is the nation's expansive middle class that can fall between the cracks when it comes to long-term care, experts say.

Even those who think ahead often don't save enough because they are struggling to make ends meet.

"People buy insurance for their life because they know they are going to die, for their car because they know that can get in an accident and for their health because they know they can get sick, but people don't tend to buy insurance because they think they are going to need someone to help them take a bath," said Phyllis Mitzen, co-program director of the Center for Long-Term Care Reform at the Health and Medicine Policy Research Group in Chicago.

An initiative that would have incorporated long-term care into the Obama administration's health reform plan was scrapped in October after actuaries determined that it would not be financially self-sustainable over the long haul. The Community Living Assistance Services and Supports Act would have created a voluntary, self-funded, employer-based insurance option to help people save for long-term care.

In announcing its demise, Health and Human Services Secretary Kathleen Sebelius wrote in a letter to Senate leaders that the problem was not going away.

"By 2020, we know that an estimated 15 million Americans will need some kind of long-term care, and fewer than 3 percent have a long-term care policy," she wrote. "These Americans are our family, our friends and our neighbors. If they are to live productive and independent lives, we need to make sure that they have access to the long-term care supports that make that possible."

Costs to society also are expected to skyrocket. Without insurance coverage or personal wealth, Sebelius said, "more Americans with disabilities will rely on Medicaid services once their assets are depleted, putting further strain on state and federal budgets."

In Illinois, nursing home care averages about $79,000 per year for a private room and $61,000 for a semiprivate room. The annual cost for care in an assisted living facility averages about $41,000, and home health aides cost about $21 per hour.

Most people assume Medicare will pay the bills, but the program covers long-term care only under certain conditions and for a limited time. While Medicaid covers long-term care, beneficiaries have to be poor or willing to "spend down" their assets to be eligible. Private insurance can be expensive and excludes applicants with serious medical problems.

As a result, many families pay out of pocket until they exhaust their resources and then turn to Medicaid. That's the situation the Vitkos find themselves in.

"People are forced into poverty," said Jonathan Lavin, president and CEO of AgeOptions, the Area Agency on Aging of Suburban Cook County. "We have people transferring assets so they can get into the Medicaid program. We've asked family caregivers more than anyone should really ask them to do. We've never sorted this out. It's a major concern that … there aren't enough resources available."

In Illinois, the state is establishing a long-term care insurance partnership program to encourage people to buy private insurance and think about their future needs.

"If you get into the program and buy a special type of long-term care insurance, it will allow you in a legal way to keep your assets, dollar for dollar equal to the amount of benefits you get from your long-term care insurance, and still legitimately qualify for … Medicaid," said Julie Hamos, director of the Illinois Department of Healthcare and Family Services.

Experts agree that the best time to plan for long-term care is when it's not yet needed. Some say consumers should start thinking about it in their 40s.

The first step is for consumers to ask hard questions about how they want to live in their senior years. The answers will guide their planning and determine their choices.

For example, do you have children or grandchildren who are able and willing to help you when you need it? Do you want them to? Would you prefer to stay at home if you become disabled? Do you plan to move to another state?

Other considerations are: Do you have enough money to pay premiums for private insurance for many years, even decades? Do you have financial assets that you want to leave to your family? Are you comfortable with the idea of going on Medicaid? What does your spouse or life partner want?

Even people with financial means and family members willing to help have to be realistic, said Murray Gordon, CEO at MAGA Ltd., a company based in Riverwoods that specializes in long-term care planning. Gordon said family members often don't know what's involved in caring for a loved one at home.

"It takes a big toll on a caregiver, especially if they are not trained," he said.

To start planning, Mitzen suggested attending a seminar on long-term care run by one of the local area agencies on aging or a local senior center.

One option is private insurance, which costs less when the buyer is young.

"A good-quality policy bought at age 65 is going to cost between $2,400 and $3,000 a year per person," said Joshua Wiener, director of the program on aging, disability and long-term care at RTI International, a nonprofit research institute.

"Even if you're talking about someone who is 50, it is about $1,000 to $2,000 a year per person," Wiener said. "For a married couple, you're talking about as much as 3 or 4 grand. That's not chump change, especially now, when people may be unemployed or under water in terms of their mortgage and the cost of going to college is skyrocketing."

Long-term care policies cover in-home care, assisted living facilities and nursing homes, as well as specialized facilities for people who have Alzheimer's disease, Gordon said. "You can start out at home and move on (to a nursing facility), or vice versa," he said.

Although the plans are highly individualized, Gordon said a typical plan provides for benefits of $200 a day for a five-year period, or about $365,000 in benefits. If the policyholder doesn't use the entire daily benefit, "it remains in your benefit pool, like a savings account," Gordon said.

Experts recommend getting an inflation rider for the policy, which protects against rising costs.

"The way these products work, you buy a fixed maximum dollar payment per day, unlike health insurance, where you pay a percentage of the charge," Wiener said.

Policyholders should budget for possible rate increases, which require approval from the state department of insurance, and consider the cost of care in another area if they expect to move.

When consumers need care, Mitzen suggests linking up with a care coordinator who can help them navigate the patchwork of services and put together an individualized plan.

"The system is fragmented," said Elizabeth Lough, information and assistance team leader at AgeOptions. "You might have to get Meals on Wheels from one agency. You might have to private-pay to have someone help with bathing. It's not necessarily a seamless system; it can be somewhat patchwork."

The Vitkos turned to Solutions for Care, a nonprofit social services agency in North Riverside, for help. They also have applied for Medicaid. Carl Vitko said his fingers are crossed.

"The government wastes money on ridiculous things, and they can't afford to take care of the elderly population," he said. "What are they going to do with all of us? They have to come up with some solution."

Resources

•completelongtermcare.com — Maintained by LTC Global, which owns and operates a group of national insurance agencies. Provides state-specific information on Illinois.

•medicare.gov/nhcompare — Allows consumers to look up specific nursing homes or compare one with another. Links to a booklet on selecting a nursing home.

•medicare.gov/longtermcare/static/home.asp — General information about long-term care and how to assess your needs.

•Illinois Department on Aging — Its website at state.il.us/aging describes services offered by contracted providers. A help line (800-252-8966, 800-206-1327 TTY) provides information and links consumers to local agencies.

•naic.org— The National Association of Insurance Commissioners offers tip sheets, consumer alerts and other information about long-term care insurance.